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The European Currency Interrupted the Three-day Rally

11/10/2022 10:40 AM

The European currency shows mixed trading dynamics, testing 1.0020 for a breakout. The EUR/USD pair is trying to recover after a moderate decline the day before, which interrupted the instrument's three-day rally and did not allow it to consolidate on new local highs from September 13.

The reason for the appearance of negative dynamics was the corrective sentiment in the market. Market participants are preparing for today's publication of macroeconomic statistics from the US on the dynamics of consumer prices for October, which may have a significant impact on the position of the US Federal Reserve on the issue of further tightening of monetary policy, as record inflation remains one of the main drivers of an active increase in interest rates. Analysts' current forecasts suggest that the Consumer Price Index will slow down from 8.2% to 8.0% in annual terms, and in monthly terms it may accelerate from 0.4% to 0.6%.

Tomorrow statistics on the dynamics of consumer prices for October will be presented by Germany, and experts predict a value of 11.6%. In addition, representatives of the European Central Bank (ECB) Luis de Guindos, Fabio Panetta and Philip Lane are expected to speak during the day and comment on the publication of forecasts for the growth of the European economy. In turn, the President of the ECB, Christine Lagarde, said that the effect of the measures taken by the regulator, including a phased increase in interest rates to combat inflation, will be manifested gradually. However, according to the agency's survey, expectations for consumer price growth are at 3.0% in three years and 5.1% over the next 12 months.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is expanding, while remaining spacious enough for the current activity level in the market. MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic, having rebounded from its highs, reversed into a descending plane, signaling in favor of the development of a correctional decline in the ultra-short term.

Resistance levels: 1.0050, 1.0100, 1.0150, 1.0200. | Support levels: 1.0000, 0.9950, 0.9900, 0.9850.

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